By: André Jerusalem

CVM updates Resolution 874, bringing impacts to investment funds that trade crypto assets.

On August 16, the Board of the Brazilian Securities and Exchange Commission (“CVM”) followed the Sandbox Committee (“CDS”)’s statement and approved the requests to amend CVM Resolution 874 (“Resolution”), to provide that the temporary authorizations and exemptions provided for in the Resolution are valid until June 6, 2023; and that the Resolution came into effect on June 7, 2022.

It should be noted that the CVM sandbox is a regulatory approach designed to allow greater innovation in activities regulated by the agency. In this sense, the sandbox has already been used by several capital market regulators in foreign jurisdictions and, more recently, it has also become an important tool for the CVM.

Thus, the sandbox is an experimental environment in which admitted participants will receive temporary and conditional authorizations to develop innovations in regulated activities in the capital markets, and will have their trajectory monitored and guided by the CVM. According to the CVM itself, the main advantages of participating in the sandbox are the following:

• promoting innovation in the capital market.
• guidance to participants on regulatory issues during the development of activities to increase legal certainty.
• reduction of costs and maturation time to develop innovative products, services and business models.
• increased visibility and traction of innovative business models, with possible positive impacts on their attractiveness to venture capital.
• increased competition between service providers and suppliers of financial products in the securities market.
• financial inclusion resulting from the launch of less costly and more accessible financial products and services.
• improvement of the regulatory framework applicable to regulated activities.